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European Stocks, Metals Climb as Euro Strengthens

By Richard Frost and Paul Dobson
November 22, 2012 6:26 PM EST 9 Comments
European Stocks, Metals Climb on China Output; Euro Strengthens
European Stocks, Metals Climb on China Output; Euro Strengthens

European stocks rallied for a fourth day and metals gained on signs China’s manufacturing is rebounding. The euro strengthened and Greek bonds rose for a 10th day as the region’s leaders prepared to hold budget talks.

The Stoxx Europe 600 Index (SXXP) climbed 0.6 percent. Futures on the Standard & Poor’s 500 Index (MXEF) added 0.2 percent in the U.S., where markets were closed today for the Thanksgiving holiday. The euro appreciated against 14 of its 16 major counterparts tracked by Bloomberg. Israel’s shekel advanced for a fifth day as the Mideast cease-fire agreement came into effect. Copper gained 0.3 percent.

A survey indicating the first expansion in China’s factory output in 13 months boosted optimism that growth in the world’s second-largest economy is recovering after a seven-quarter slowdown. Leaders of the 27 European Union nations were due to gather for budget negotiations in Brussels today and euro-area finance ministers will meet Nov. 26 to discuss Greek aid. Israel and the Palestinian group Hamas yesterday agreed to a truce, halting eight days of aerial assaults.

“Chinese activity has been picking up since September and it’s an indication that the economy has stabilized,” Gopal Agrawal, who helps oversee $1 billion as chief investment officer at Mirae Asset Global Investments (India) Pvt., said by phone today from Mumbai. “The truce between Israel and Hamas is sentimentally positive.”

Stocks Rally

The Stoxx 600 increased to a two-week high as all 19 industry groups advanced. SABMiller Plc (SAB) rallied 6.4 percent, the most in a year, after the world’s second-biggest brewer said first-half earnings rose 17 percent as gains in Latin America and Africa offset European declines. Daily Mail and General Trust Plc, the publisher of Britain’s Daily Mail newspaper, surged as much as 13 percent, the biggest advance in three years, as full-year operating profit increased.

Glencore International Plc (GLEN) gained 2 percent as the European Commission approved its takeover of Xstrata Plc. (XTA) Competition Commissioner Joaquin Almunia said Glencore’s offer to stop buying zinc from Nyrstar NV ensured that the market for the metal would remain competitive. Xstrata rallied as much as 3.2 percent.

The MSCI Emerging Markets Index rose 0.4 percent, gaining for a fourth day, the longest winning streak since Nov. 2. Fifty-day volatility on the gauge fell to the lowest since 2004.

The preliminary reading of a Chinese purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics was 50.4 for November. That compares with a final level of 49.5 for October. A reading above 50 indicates expansion.

Brazil Markets

Brazil’s real dropped to a three-year low as Finance Minister Guido Mantega said the currency was on a “normal trajectory,” encouraging speculation that the central bank will let it stay weak. The Bovespa stock index advanced 0.3 percent today.

Copper for delivery in three months rose to $7,715 a metric ton on the London Metal Exchange. Aluminum, tin, zinc and lead advanced while nickel fell.

The Nikkei 225 Stock Average (NKY) rallied 1.6 percent to a six- month high as a depreciating yen boosted the earnings outlook for exporters. Japan’s currency retreated versus 10 of its 16 major peers, touching 82.84 per dollar, the weakest intraday level since April 4.

Euro Boost

The euro gained 0.4 percent to $1.2882 after touching $1.2899 earlier today, the highest level since Nov. 2. It strengthened 0.3 percent to 106.19 yen.

Greece’s 10-year bond yield fell as much as 65 basis points to 16.1 percent, the lowest since the nation’s debt was restructured in March. Spain’s 10-year yield dropped four basis points to 5.66 percent as the nation sold 3.88 billion euros ($5 billion) of bonds at an auction, beating its 3.5 billion-euro target.

The cost of credit-default swaps insuring Portuguese sovereign debt fell for a fourth day, dropping 8 basis points to 517 basis points. The contracts tumbled 20 percent this week from 641 basis points on Nov. 16.

Israel’s shekel strengthened 0.5 percent to 3.8767 versus the dollar after gaining as much as 1 percent, and the benchmark stock index rose 0.2 percent. Israel and Hamas agreed to end more than a week of air strikes and missile attacks after talks brokered by Egypt’s Islamist leaders and the U.S. Futures on crude oil slid 0.4 percent to $87.01 a barrel in electronic trading on the New York Mercantile Exchange.

To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

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